Malaysia

Malaysia country brief

Overview

Located just north of the equator, Malaysia borders Thailand, Indonesia and Brunei Darussalam, and has maritime boundaries with Indonesia, Singapore and the Philippines.

Both West (or Peninsular) Malaysia (area 131,794 square km) and East Malaysia (Sabah and Sarawak 198,000 square km) consist of rugged forested mountainous interiors descending to coastal plains. The total area is about half that of New South Wales. Malaysia's highest peak is Mount Kinabalu at 4,100 meters in East Malaysia. Malaysia's climate is hot (up to 34°C) and humid (2 to 4 meters of rain annually).

According to the Department of Statistics Malaysia, Malaysia's population was 30.3 million in mid-2014. The country's ethnic groups include Malay and indigenous (68.1 per cent), Chinese (24.8 per cent), Indians (7.1 per cent) and others (less than 1 per cent). Sunni Islam is the predominant religion, principally among Malays, but the religions represented include Buddhism, Hinduism and Christianity. The official language is Bahasa Malaysia (Malay), but English is widely used, as are Chinese and Tamil within those communities.

Political overview

The Federation of Malaya was established on 31 August 1957 after the British surrendered their colonial rule over the Malaysian peninsular. On 16 September 1963, the Federation was enlarged by the accession of Singapore, Sabah (formerly British North Borneo) and Sarawak. The name 'Malaysia' was adopted from that date. Singapore left the Federation on 9 August 1965.

System of Government

Malaysia is a federal constitutional monarchy and a parliamentary democracy. The constitution establishes the Head of State as the Yang di-Pertuan Agong (King), and the Head of Government as the Prime Minister.

The position of the King is shared on a five-year rotating basis by the hereditary rulers of 9 of Malaysia’s 13 states (eight Sultans and one Rajah). The King's functions are largely ceremonial.

Legislative power is divided between federal (bicameral) and state (unicameral) legislatures. The Federal Parliament comprises the House of Representatives (Dewan Rakyat) and the Senate (Dewan Negara). The House of Representatives has 222 members elected for five-year terms in single-seat constituencies. The Senate consists of 26 members elected by State Legislative Assemblies and 44 appointed by the King on the advice of the Prime Minister. The tenure of office is a three-year term for a maximum of two terms.

The governing Barisan Nasional (National Front) coalition comprises 13 parties including the United Malays National Organisation (UMNO), the Malaysian Chinese Association and the Malaysian Indian Congress. This coalition, in which UMNO is the dominant voice, along with its predecessor, has been in power since Independence.

The Barisan Nasional Government is led by Prime Minister Dato' Sri Najib Razak, who succeeded former Prime Minister Tun Abdullah Badawi on 3 April 2009.

In the General Election on 5 May 2013, the Barisan Nasional coalition was returned to power with a reduced majority of 133 seats, down from the 140 seats won in the 2008 elections. The Opposition Pakatan Rakyat (People’s Pact) alliance won 89 seats. Following a split within the Pan-Islamic Malaysian Party (PAS), in September 2015 Pakatan Rakyat was replaced by a new opposition coalition alliance, Pakatan Harapan (People’s Hope), comprised by the Democratic Action Party, People's Justice Party and National Trust Party.

Foreign policy

The principles of national sovereignty and mutual respect for territorial integrity, mutual non-aggression, and non-interference in domestic affairs of other countries are central tenets of Malaysia's foreign policy. This is reflected in Malaysia's membership of the United Nations and prominent roles in organisations such as the Association of Southeast Asian Nations (ASEAN), the Organisation of the Islamic Conference (OIC) and the Non-Aligned Movement (NAM).

Malaysia was one of ASEAN's five original members (founded in 1967). In 2015, Malaysia chaired ASEAN and the East Asia Summit (EAS). In its role as ASEAN Chair, Malaysia participated in the full suite of G20 meetings under the 2015 Turkish G20 Presidency.

From 2015, Malaysia also assumed non-permanent membership of the UN Security Council for the term 2015-16.

On 22 November 2015, the Prime Ministers of Australia and Malaysia announced the elevation of the Australia-Malaysia relationship to a Strategic Partnership. The elevated Partnership acknowledges the enduring nature of our bilateral ties, our shared aspirations for stability and prosperity, and the depth and breadth of our cooperation across economic, foreign affairs, defence and security, and people-to-people spheres.

Australia’s diplomatic representation in in Kuala Lumpur dates back to 1955 when Australia opened its first Commission to the then Federation of Malaya. Two years later, upon the independence of the Federation of Malaya in 1957, the Australian Commission became the Australian High Commission. We will celebrate the 60th anniversary of diplomatic relationship in 2017.

Australia was closely associated with the establishment of the independent Federation of Malaya in 1957. Australia sponsored Malaya's application for membership of the United Nations and was one of 15 countries to establish formal diplomatic relations with the Federation of Malaya in 1957. Sir William McKell, former Governor-General of Australia, together with four other Commonwealth jurists, helped draft its Constitution.

The current Australia-Malaysia relationship draws on many long-standing associations including:

parliamentary, legal and administrative systems with similar features and common membership of the Commonwealth

people-to-people links including students, business councils and immigration

regular and close consultations in a variety of policy fields such as a bilateral Foreign Ministers' Meeting and a ministerial-level Joint Trade Committee meeting, and

bilateral defence and security cooperation, including through the Malaysia-Australia Joint Defence Program and the Five Power Defence Arrangements.

Australian and Malaysian troops have fought together during: the Malayan Campaign of World War II; the Malayan Emergency (1950-60); and the period of Confrontation (1963-66).

In 2007, Malaysia celebrated its 50th anniversary of independence and Australia and Malaysia celebrated the 50th anniversary of formal diplomatic relations. To commemorate the occasion, the Department of Foreign Affairs and Trade (DFAT) released a bilingual photographic publication entitled Australia-Malaysia: Celebrating 50 Years. In addition, the Australian Parliament's Joint Standing Committee on Foreign Affairs, Defence and Trade tabled a report on Australia's Relationship with Malaysia. The report noted the changing nature of Australia's relationship with Malaysia, from one of support in the early years of Malaysia's formation to one of wide-ranging and extensive collaboration across all fields.

Cooperation between the Australian and Malaysian Governments has increased further since 2014 with our joint search efforts in response to missing Malaysian Airlines flight MH370 and the downing of Malaysian Airlines flight MH17.

People to people links

Education

Australian expertise in education and training is highly regarded in Malaysia. In 2015, Malaysia ranked third as a source country for international students in higher education in Australia and fifth overall across all sectors. There were over 24,000 Malaysian student enrolments in Australia in 2015, a 7.9 per cent increase on 2014. Malaysian-Australian alumni are estimated to number over 300,000. The Malaysian Australian Alumni Council (MAAC) is an organisation for Malaysian alumni associations of Australian universities. The MAAC spearheads the Malaysia-Australia Colombo Plan Commemoration Scholarship initiative, which provides for a two-way exchange of scholars between Australia and Malaysia.

University twinning arrangements and Australian campuses in Malaysia now allow Malaysian and other international students to undertake Australian courses in Malaysia. Three Australian universities have campuses in Malaysia – Monash University, Curtin University and Swinburne University of Technology. In 2015, over 24,000 Malaysian and other international students were enrolled to study for Australian qualifications in Malaysia.

The five-year Australia-Malaysia ‘Towards 2020’ program of 21 short and long-term scholarships and awards, designed to support Malaysia’s economic reform agenda, welcomed its first recipients in 2014.

Since 2015, Malaysia participates in the ‘Bridge’ schools partnerships program which links schools in Malaysia and schools in Australia, currently funded by the Australia-ASEAN Council. In 2011, Australia and Malaysia signed a Memorandum of Understanding on Education and in 2012 a Memorandum of Understanding on Higher Education.

In 2015 the first Australian students traveled to Malaysia under the New Colombo Plan (NCP). More than 400 Australian undergraduates will study in Malaysia under the New Colombo Plan in 2015 and 2016, including 10 prestigious scholarship recipients. The NCP is a signature foreign policy initiative of the Australian Government which aims to lift knowledge of the Indo-Pacific in Australia, strengthen people-to-people and institutional relationships and balance the two way flow of students between our countries. The NCP provides for study and internships undertaken by Australian undergraduate students in the region.

Migration/tourism

According to the latest Census in 2011, 116,196 Malaysia-born people live in Australia, an increase of 25.8 percent from the 2006 Census.

In 2015, Australia welcomed approximately 338,800 short-term visitor arrivals from Malaysia, making it Australia's second-largest source of visitors from South-East Asia after Singapore.

Work and holiday arrangement

Australia and Malaysia have a work and holiday program arrangement which allows Australians and Malaysians aged between 18 to 30 years to work and holiday in each other's country for up to 12 months. For information about the requirements for this visa and how to apply, visit the Malaysian High Commission website.

Australia-ASEAN Council

The former Australia-Malaysia Institute and former Australia-Thailand Institute have been merged as part of the creation of the Australia-ASEAN Council. The Australia-ASEAN Council (ACC), launched by Foreign Minister Julie Bishop on 8 September 2015, will generate opportunities for Australian business, education, science and innovation and the arts to work with partners in South-East Asia. Further information can be found at Australia-ASEAN Council.

Defence and security links

Australia's defence relationship with Malaysia dates back to well before its independence in 1957, and reflects a common commitment to the security and stability of the region.

Bilateral defence cooperation occurs through the Malaysia-Australia Joint Defence Program, which commenced in 1992. The program includes training of Malaysian military personnel in Australia, attachments of Armed Forces personnel from each country to the other, and annual combined field exercises. Australia is Malaysia's major source of external military training.

An ongoing Australian Defence Force presence exists at the Royal Malaysian Air Force (RMAF) Base at Butterworth.

The Five Power Defence Arrangements (FPDA) were formally established in 1971, committing Australia, Malaysia, New Zealand, Singapore and the United Kingdom to consult on a response to any armed attack or threat against Malaysia or Singapore. More recently, the FPDA has expanded its focus to address non-conventional security threats facing the region, including terrorism and maritime security.

Australia and Malaysia cooperate closely on security issues, with close links between police and immigration agencies. In December 2014, Australia and Malaysia concluded a Memorandum of Understanding on Transnational Crime Cooperation. A Memorandum of Understanding on Maritime Security was signed on 12 July 2011 and a Memorandum of Understanding on Combating Transnational Crime and Developing Police Cooperation was signed on 13 May 2009. In August 2002, Australia and Malaysia signed a Memorandum of Understanding to combat international terrorism.

Bilateral agreements on mutual assistance in criminal matters and extradition entered into force on 28 December 2006.

Economic overview

Since 1957, Malaysia has transformed from a commodity-based economy, focusing on rubber and tin, to one of the world's largest producers of electronic and electrical products. Malaysia is a significant trading nation as measured by trade as a share of gross domestic product (GDP). Its goods and services exports comprise over 70 per cent of its GDP.

According to the Malaysian Government, manufactured goods made up over 80 per cent of Malaysia’s exports in 2015, with electronic and electrical products comprising almost 36 per cent of the value of total merchandise exports for the year. Malaysia is also the world's second-largest exporter of palm oil and one of the region's major oil and gas exporters.

According to key development indicators, Malaysia is a high middle-income, export-oriented economy, with per capita GDP (in current prices) of US$10,426 in 2014, life expectancy of 74 years and gross primary school enrolment of 100 per cent of the school-age population.

In 1991 Malaysia set out a plan to achieve high income, developed-economy status by 2020 (Vision 2020). Malaysia’s Vision 2020 policies include plans to eradicate poverty and advance the economic position of Bumiputeras ('sons of the soil' – mainly Malays but also other indigenous groups). Over the last several years, there has been a significant shift in the balance of ownership, coinciding with the emergence of an influential new class of Bumiputera entrepreneurs.

Since his appointment in April 2009, Prime Minister Najib has set out a number of reforms aimed at liberalising the economy further, especially the services sector. From 1 April 2015 a Goods and Services Tax (GST) was introduced, fixed at 6 per cent, bringing Malaysia into line with other major international economies.

Now in the second half of its 10-year program of economic transformation, Malaysia has made good progress in achieving its goals and is moving steadily towards high-income status. However, a number of challenging structural economic reforms will need to be addressed in the medium term in order for it to achieve sustainable and equitable long-term economic growth.

Recent economic performance and outlook

GDP growth in 2015 was 4.7 per cent, following growth in 2014 of 6 per cent. Malaysia continues to have a large trade surplus (since November 1997). Inflation slowed to 2.1 per cent in 2015 after reaching 3.1 per cent in 2014. Malaysia has run a budget deficit since 1998. In 2014 the budget deficit reached 3.5 per cent of GDP.

Trade and foreign investment

Malaysia is a strong supporter of the multilateral trading system, in particular the World Trade Organization (WTO). Malaysia participates actively in regional economic arrangements such as the ASEAN Free Trade Area (AFTA) and the Asia-Pacific Economic Cooperation (APEC). Malaysia is also a member of the Cairns Group, which advocates more liberalised global trade in agriculture. In 2015, Malaysia's largest trading partners were China, Singapore, the United States and Japan.

Malaysia has concluded and implemented bilateral FTAs with Australia, Japan, Pakistan, New Zealand, Chile, India and Turkey. ASEAN has concluded FTAs with China, Japan, South Korea, Australia, India and New Zealand. Malaysia is also pursuing bilateral FTA negotiations with the European Union. Malaysia and Australia were among the twelve countries which signed the Trans-Pacific Partnership (TPP) Agreement in February 2016 and remain parties to the current negotiations on the Regional Comprehensive Economic Partnership (RCEP).

Foreign Direct Investment (FDI) has played a key role in Malaysia's development, although over the past decade, annual net FDI inflows have fallen. In 2015, Malaysia’s FDI fell by 21% decrease in value compared to 2014 due to global economic conditions, including the drop in oil and commodity prices, as well as the rise of the US dollar.

Australia-Malaysia economic and trade relations

Malaysia is Australia's second-largest trading partner in ASEAN and eighth-largest partner overall. In 2014-15, total merchandise trade between Australia and Malaysia was A$16.4 billion, with Australian exports of A$6.1 billion and imports of A$10.4 billion. Total two-way services trade in 2014-15 was A$3.2 billion, with Australian exports of A$1.8 billion and imports of A$1.3 billion.

Major merchandise exports from Australia to Malaysia include copper, nickel, coal and wheat. Australia is a major provider of education services to Malaysia. Major Malaysian merchandise exports to Australia include crude and refined petroleum, monitors, projectors, televisions and computers.

Combined, Australia-Malaysia two-way investment more than doubled over four years from 2010 to a value of A$30.6 billion in 2014. In 2014, Malaysian investment in Australia stood at A$21 billion. Australian companies continue to pursue opportunities in Malaysia, with the stock of Australian foreign investment in Malaysia at $9.6 billion in 2014.

Malaysia-Australia Free Trade Agreement (MAFTA)

MAFTA builds on the commitments made by both countries under the ASEAN-Australia-New Zealand FTA (AANZFTA) and provides improved access for Australian exporters to the Malaysian market. Under the MAFTA, 97.6 per cent of Australia's exports (2011 figures) became tariff-free on entry into force. This will rise to 99 per cent by 2017.

Australia-Malaysia Joint Trade Committee

The Australia-Malaysia Joint Trade Committee (JTC) meetings, led by respective ministers responsible for trade, provide a regular forum for discussions on bilateral, regional and international trade and investment issues.